Archive for the ‘Gold’ Category
Grantham: ‘No market for young men’
Targeting income inequality
Value stocks, rich market
“…the volume of gold traded in London is ten times what is implied by the clearing statistics: 10.9bn ounces of gold, worth $15,200bn, changed hands in the first quarter of this year, according to the LBMA’s estimate.
“…That is 125 times the annual output of the world’s gold mines – and twice the quantity of gold that has ever been mined.
“…The 10.9bn figure compares to 1.2bn ounces of gold trades that were cleared – in other words, only a tenth of gold traded on the London market is cleared. About 1.2bn ounces were traded in the form of Comex futures in the same period.
“…The vast majority of the trading – roughly 90 per cent – was in the spot market, rather than forwards, options or swaps.
“…the $240bn average daily turnover in the London bullion market is higher than the global daily turnover of any currency pair except for the dollar/euro, dollar/yen, dollar/sterling and dollar/Aussie dollar, according to the most recent Bank for International Settlements survey
The dollar/Swiss franc, that other great safe haven trade, is worth a mere $168bn a day.”
________________________ The MasterBlog
Jim Sinclair says ‘relax’, don’t do it – don’t sell your gold!
Some commentators now see gold – and silver – ripe for recovery with the suggestion that like the rise, the subsequent falls may have been too far too fast. Others disagree.
Author: Lawrence Williams
Posted: Friday , 06 May 2011
The correction in the gold price and the sharp plunge in silver had been anticipated by a number of commentators, although the rapidity and depth of the sell-off may not have been expected, but it is interesting now that some of those who called the top are already suggesting that it may be time to move back in.
Notable among these is Peter Grandich of the well respected Grandich Letter who recommended selling gold and silver right at the top and is already telling readers to start climbing back in. Grandich says: “After literally getting out within minutes of the top in silver and gold and then watching a decline I anticipated could take weeks or months happen in a matter of days, I believe it’s time to go back in and buy back those positions. I may be 10% too early but we have plenty of room given what we sidestepped. So I’m now back in fully in gold and silver.”
Looking at what has happened in the past week, gold has lost, from peak to current levels, just under $100 – a fall of around 6% which is not massive in the scheme of things. Silver though has lost around 30% from its peak. Momentum had carried it up far faster than was reasonable and at least one commentator had described the silver price surge, and subsequent fall back, as “an accident waiting to happen”. It had risen too far too fast and to an extent the euphoria so generated had probably been partly responsible for dragging gold up a little faster than expected, or warranted.
In a similar manner, silver’s initial stumble, and then sharp plunge, may have also been a factor in gold losing its lustre.
But the sell-off hasn’t just been in precious metals. Revived general doubts about global economic strength have run over into most commodities, with investors scrambling for what they see as a safe haven – but in this respect it has been the dollar they have turned to, rather than gold and there has been a recovery in the dollar index over the past day or so which has been another contributing factor in the precious metals’ decline.
More sober analysis suggests, though, that the dollar is not worthy of a revival as long as the U.S. Fed keeps on pumping money out to the banks, and then supposedly to the U.S. economy as a whole – although there are serious doubts about how much of this government largesse is actually filtering down the line. History tells us that money printing on this kind of scale eventually has to lead to inflation – indeed to severe inflation. Perhaps the banks’ sticky fingers have to an extent prevented this from happening so far with the government money finding its way to the investment community and boosting the stock markets rather than the economy as a whole. – Another bubble waiting to burst?
Indeed all the factors which had led to the rise of gold – we’ll leave silver out of it for the moment because it was speculative fervour largely responsible for that metal’s over the top advance – are still with us, and at some stage the investment community will recognise this and move back into gold as the haven of preference. Whether that will happen now – or later in the year, remains to be seen.
Long term gold proponent, Jim Sinclair, who has quite a following, advises gold holders to “relax”. He’s looking for a major upturn in gold as soon as June and is still targeting $5,000 as a longer term objective. This seems far-fetched – but then people would have said that about $1,000 gold, let alone $1500, only two or three years ago.
As for silver, will we see another meteoric rise if gold does recover first. Perhaps too many people got their fingers burnt in the recent rise for a similar surge to happen in the short to medium term, and there could still be ground here for further falls befor the price stabilises and starts to rise again. Maybe a return to a gold:silver ratio of nearer 45:1 or higher (currently 42.5) may be on the cards before real progress starts to be made again here.
On the bearish side, however, there are those who suggest that the decline in gold and silver may not be done yet. Technical analyst, Dr Nu Yu, points to a “Three Peaks and a Domed House” chart pattern – I guess this means something to the technical analysis community – suggesting a gold price fall of 17% to around $1290 by June, but offers no further projections beyond then. His chart is shown below courtesy ofwww.munknee.com.
As with economists, so it is with gold analysts. There are always drastically opposing views.
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Mexican Central Bank buys almost 100t of gold (FT.com)
By Jack Farchy in LondonPublished: May 4 2011 11:35 | Last updated: May 4 2011
The central bank of Mexico bought nearly 100 tonnes of gold in February and March, the latest emerging market country to turn to bullion as a means of diversifying away from the faltering dollar.The purchase is one of the largest by a central bank in recent history. The gold, worth $4.6bn at current prices, is equivalent to about 3.5 per cent of annual mined output.- The central bank has not been publicly announced the move, but has reported it both on its own balance sheet, posted online, and to the International Monetary Fund’s statistics on international reserves.Central banks became net buyers of gold last year after two decades of heavy selling, a dramatic reversal that has helped propel the price of bullion to a series of record highs.On Wednesday morning, gold was trading at $1,535 a troy ounce, down from the nominal record of $1,575.79 touched on Monday.Mexico follows other booming emerging market economies, including China, India and Russia, which have all made large additions to their gold reserves in recent years.Matthew Turner, precious metals strategist at Mitsubishi, the Japanese trading house, said the purchase “seems to confirm there’s an appetite now among emerging economies with large forex reserves to add to their gold reserves. Gold is seen as one way in which to diversify away from the dollar- or euro-denominated assets.”The dollar has plunged 10 per cent since January against the world’s major currencies and is trading near an all-time low. Robert Zoellick, president of the World Bank, has suggested that gold should form part of a new international monetary system.China announced in 2009 that it had bought 454 tonnes of gold over the previous six years; India bought 200 tonnes of gold directly from the International Monetary Fund in October 2009; and Russia has bought just less than 400 tonnes on the open market over the past five years.However Mexico’s buying in February and March, which amounted to 93.3 tonnes of gold, is one of the most rapid programmes of accumulation on record. Apart from India’s off-market purchase in 2009, the 78.5 tonnes bought in March is the largest monthly purchase by a central bank in at least a decade, according to data from the World Gold Council.The Bank of Mexico could not be reached for comment on Wednesday morning.
>Texas University Takes Cue From Kyle Bass to Hold $1 Billion in Gold Bars
By David Mildenberg and Pham-Duy Nguyen – Apr 16, 2011 11:45 AM GMT+0200
The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion and is storing the bars in a New York vault, according to the fund’s board.
The fund, whose $19.9 billion in assets ranked it behind Harvard University’s endowment as of August, according to the National Association of College and University Business Officers, added about $500 million in gold investments to an existing stake last year, said Bruce Zimmerman, the endowment’s chief executive officer. The holdings are worth about $987 million, based on yesterday’s closing price of $1,486 an ounce for Comex futures.
The decision to turn the fund’s investment into gold bars was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment’s board, Zimmerman said at its annual meeting on April 14. Bass made $500 million on the U.S. subprime-mortgage collapse.
“Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said yesterday in a telephone interview. “I look at gold as just another currency that they can’t print any more of.”
Gold reached an all-time high of $1,489.10 an ounce yesterday in New York as sovereign debt concerns boosted demand for the metal as a store of value. Gold has climbed 28 percent in the past year on Comex.
The endowment, which oversees funds held by the University of Texas System and Texas A&M University, has 6,643 bars of bullion, or 664,300 ounces, in a Comex-registered vault in New York owned by HSBC Holdings Plc (HSBA), the London-based bank, according to a report distributed at the meeting in Austin.
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The annual payout will rise at a rate of 20 cents per share for each $100 per ounce increase in the average realized gold price.
(Reuters) – Newmont Mining Corp (NEM.N), the world’s second-largest gold producer, plans to link its quarterly dividend to the price of gold it realizes for the preceding quarter.
The annual payout will rise at a rate of 20 cents per share for each $100 per ounce increase in the average realized gold price. The current gold price of about $1,450 an ounce will mean Newmont’s annual dividend would be $1.00.
“With our strong balance sheet and cash flow, we are positioned to fund profitable growth and to pay a new gold price-linked dividend,” Chief Executive Richard O’Brien said in a regulatory filing before its investor day.
The first quarterly dividend under this policy is expected to be payable on June 29. The company paid a quarterly dividend of 15 cents per share on March 30.
Newmont continues to see 2011 attributable gold production of 5.1-5.3 million ounces.
Newmont shares closed at $56.45 on Wednesday on the New York Stock Exchange.
(Reporting by Krishna N Das in Bangalore; Editing by Maju Samuel)
Newmont plans to link dividend to gold prices | Reuters